VW’s Cash Cow Threatened as Emission Scandal Spreads to Audi

A key engineer tainted by the emissions scandal at Volkswagen, was lost by  Audi, the group’s biggest profit center, even as the German auto maker attempts to contain the fallout from the emissions cheating.

After a probe showed he was aware of the manipulation when he took the job less than 10 months ago, development chief Stefan Knirsch left the manufacturer with immediate effect this week. Knirsch was picked by Audi Chief Rupert Stadler to succeed Ulrich Hackenberg and was a company veteran who started in Audi’s engine design unit in 1990. After the scandal broke a year ago, Ulrich Hackenberg was pushed out in the first round of management purges. Now as investigators seek to untangle the origins of the scandal, Stadler himself has come under increased scrutiny.

“We made it clear from the start that we don’t spare big names in the probe and will act if it becomes necessary,” Berthold Huber, deputy chairman of the unit’s supervisory board, said in a statement about Knirsch’s departure. Audi didn’t comment on the reasons for the executive’s abrupt exit.

Audi is a linchpin in the Volkswagen structure. It’s an incubator for technology that filters down to the group’s mass-market brands and a proving ground for executives in addition to providing the biggest share of profit.

Following the same path as former Chairman Ferdinand Piech, former Chief Executive Officer Martin Winterkorn ran Audi before being promoted to VW’s top job. Questions about whether Audi with its deep technology know-how played an integral role and about the responsibility for the cheating have been raised by that close-knit relationship.

Albeit on a fairly marginal scale, Audi has already been implicated in the yearlong drama. U.S. authorities targeted Audi for developing bigger motors that don’t comply with diesel regulations apart from the rigging of smaller Volkswagen diesel engines. Before backtracking, the car manufacturer initially rejected the allegations. And even after a settlement for the smaller cars, fixing that issue, encompassing about 85,000 vehicles, remains unresolved.

In the past week for the media coverage tracing the scandal, Audi has become a focal point. A report alleged that some executives at the brand were aware of the cheating for almost a decade and another report in Der Spiegel linked Stadler to the crisis.

Claiming in the Rheinische Post newspaper this weekend that’s he’s helping the investigation, the Audi CEO, who has run the brand for close to a decade and was part of Winterkorn’s inner circle, fired back.

From an also-ran manufacturer in the 1980s to a carmaker that aspired to take the luxury-car crown by the end of this decade, Stadler, 53, has been instrumental in raising the cachet of the brand. From the R8 supercar that shares parts with Lamborghini, the Italian sports-car maker owned by Audi to the A1 subcompact that rivals with the Mini hatchback, Audi has a huge range of models. The A8 flagship competes with the Mercedes-Benz S-Class and BMW 7 series.

(Adapted from Bloomberg)

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